Memories sure are short among the rich.

Just a year after getting burned by the steep losses, high fees and lock-up windows of hedge funds, the wealthy are piling back into these investment vehicles.

A survey from Spectrem Group shows that half of all households surveyed with $25m or more in net worth had investments in hedge funds in 2010. That is a big jump from 2007, before the depths of the financial crisis, when just 35% of such households had hedge fund investments.

They also are putting in sizable amounts of cash. The mean hedge fund holding for this group is $4.6m in 2010.

In fact, the wealthy seemed to have rejoined the entire conga line of costly alternative investments.

More than half of households with a net worth of $25m or more own private equity (56%) and venture capital (52%) in 2010–up from 39% and 37%, respectively, in 2007.

“While hedge funds have gotten something of a black eye in recent years, the nation’s wealthiest investors have not been scared off,” said George H Walper Jr, president of Spectrem Group. “With their exposure to private equity and venture capital also is exceeding 2007 levels, it appears the richest Americans are not afraid to accept a little risk to help expand their portfolios.”

I know the hedge fund industry will flame me for this, but I find these numbers baffling. It was less than two years ago that many rich folks were swearing off hedge funds for good.

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After all, they were paying fees of 2% of assets and 20% of any profit to beat the market and to find that mythical “Alpha.” What they got instead was a more-expensive version of the overall market downturn. Plus, many couldn’t pull their cash out due to lock-ups.

According to the Merrill Lynch/Capgemini World Wealth Report, hedge funds in 2008 accounted for 24% of the alternative investments in millionaire investment portfolios, down from 31% in 2007. The decline came as “as the hedge fund industry posted its worst-ever performance and [the wealthy] shifted to more traditional investment vehicles,” the report said.

I realise hedge funds and private-equity firms are having a better year in 2010. And certain hedge funds make sense for certain investors. Hedge-fund managers are already touting new marketing pitches about “managing risk.”

But after so many of the rich vowed to return to basics and to treat investments as a way to preserve their fortunes rather than make a new ones, I find the hedge-fund stampede puzzling.